Declining U.S. vacancies point to slowing job growth

WASHINGTON (Reuters) - U.S. job openings fell for a second straight month in July amid decreases in wholesale trade and the federal government, bolstering economists’ views that job growth has peaked.

A "Now Hiring" sign sits in the window of Insomnia Cookies in Cambridge, Massachusetts, U.S., February 11, 2019. REUTERS/Brian Snyder

Signs of moderating job growth were also corroborated by another report on Tuesday showing a drop in vacancies at small businesses in August. The reports came on the heels of data last week showing hiring slowed in August. The cool-off in job growth is in tandem with a slowing economy, which is being hampered by a yearlong trade war between the United States and China.

“Last week’s jobs report sparked a debate over whether the slowdown in hiring is due to an economy hitting full employment, but today’s JOLTS report indicates that this is actually a labor market that is losing momentum,” said Nick Bunker, economist at Indeed Hiring Lab in Washington.

Job openings, a measure of labor demand, slipped by 31,000 to a seasonally adjusted 7.2 million in July, the Labor Department said in its monthly Job Openings and Labor Turnover Survey, or JOLTS. Job openings have been little changed this year since scaling an all-time high of 7.6 million in late 2018.

Vacancies in wholesale trade decreased by 55,000 in July. Federal government job openings fell by 11,000. There were small decreases in unfilled positions in financial activities, professional services and healthcare and social assistance.

But job openings increased by 42,000 in information. There were an additional 11,000 vacancies in mining and logging. The job openings rate fell to 4.5% in July from 4.6% in June.

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In a separate report on Tuesday, the NFIB independent business lobbying group said the share of small business owners reporting job openings they could not fill fell in August. Still, job openings remain at higher levels, which could ease fears that the longest economic expansion in history was in a danger of being derailed by a recession, signaled by an inversion of the U.S. Treasury yield curve.

“The U.S. has never entered into a recession with so many ‘help wanted’ signs out there across the country, meaning the labor force is already lean and mean with few surplus workers to cut,” said Chris Rupkey, chief economist at MUFG in New York.

The JOLTS report showed the hiring increased by 237,000 jobs to 6.0 million in July. That lifted the hiring rate to 3.9% from 3.8% in June. Overall hiring is, however, expected to continue slowing this year because of the end of the boost from last year’s $1.5 trillion tax cut package, U.S-China trade tensions and softening global growth.

Nonfarm payrolls increased by 130,000 jobs in August, down from 159,000 in July, the government reported last Friday.

Job growth has averaged 158,000 per month this year, still above the roughly 100,000 per month needed to keep up with growth in the working age population.

“Net hiring is expected to weaken progressively and cease altogether in the second half of 2020,” said Sophia Koropeckyj, a senior economist at Moody’s Analytics in West Chester, Pennsylvania.

The number of workers voluntarily quitting their jobs increased 130,000 to an all-time high of 3.6 million in July. The quits rate increased to 2.4%, the highest level since April 2001, from 2.3% in June. The quits rate is viewed by policymakers and economists as a measure of job market confidence.

“In the future, such an increase might be even less frequent if employer demand continues to stagnate,” said Indeed Hiring Lab’s Bunker. “The labor market remains strong, but signs point to it slowing to where job seekers may lose out on some opportunities.”

Layoffs edged up in July, lifting the layoffs rate to 1.2% in July from 1.1% in June. Layoffs rose by 20,000 jobs in the information industry.